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AMENDMENT NO.1
Dated as of November 18, 1986
to
PARTICIPATION AGREEMENT
Dated as of August 12, 1986
among
LEASING CORPORATION,
as Owner Participant
FIRST PV FUNDING CORPORATION,
as Loan Participant
THE FIRST NATIONAL BANK OF BOSTON,
in its individual capacity and as Owner Trustee
under a Trust Agreement,
dated as of August 12, 1986,
with the Owner Participant, as Owner Trustee
CHEMICAL BANK,
in its individual capacity and as Indenture Trustee under a Trust
Indenture, Mortgage, Security Agreement and Assignment of Rents,
dated as of August 12, 1916
with the Owner Trustee, as Indenture Trustee
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
as Lessee
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Sale and Leaseback of an Undivided Interest in
Palo Verde Nuclear Generating Station
Unit 2 and Certain Related Common Facilities
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6O9l.XXXXXXX.DEBT.181B:1
AMENDMENT NO. 1, dated as of November 18, 1986, to the
Participation Agreement, dated as of August 12, 1986, among XXXXXXX LEASING
CORPORATION, a New York corporation (the Owner Participant), FIRST PV FUNDING
CORPORATION, a Delaware corporation (the Loan Participant), THE FIRST NATIONAL
BANK OF BOSTON, a national banking association, in its individual capacity (FNB)
and as Owner Trustee (the Owner Trustee) under a Trust Agreement, dated as of
August 12, 1986, with the Owner Participant, CHEMICAL BANK, a New York banking
corporation, in its individual capacity (Chemical Bank) and as Indenture Trustee
(the Indenture Trustee) under a Trust Indenture, Mortgage, Security Agreement
and Assignment of Rents, dated as of August 12, 1986, with the Owner Trustee,
and PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation (the Lessee).
WITNESSETH:
WHEREAS, the Owner Participant, the Loan Participant, the
Owner Trustee, the indenture Trustee and the Lessee have previously entered into
a Participation Agreement dated as of August 12, 1986 (the Participation
Agreement); WHEREAS, the Initial Series Note was issued by the Owner Trustee in
connection with the acquisition of the Undivided Interest;
WHEREAS, Section 2(d) of the Participation Agreement provides for a refunding of
the Initial Series Note upon the satisfaction of the conditions set forth in
Sections 2(d) and 11(d) of the Participation Agreement;
WHEREAS, the parties hereto wish to refund the Initial Series
Note;
WHEREAS, such refunding of the Initial Series Note
necessitates this Amendment No. 1 to the Participation Agreement (Amendment No.
1);
WHEREAS, Section l0.1(viii) of the Indenture provides, among
other things, that the Owner Trustee and Indenture Trustee may, without the
consent of the Holders of Notes Outstanding, execute a supplement to the
Indenture in order to evidence the issuance of and to provide the terms of
Additional Notes;
WHEREAS, the Owner Trustee and the Indenture Trustee intend to
execute Supplemental Indenture No; 1, dated as of November 18, 1986
(Supplemental Indenture No. 1), to the Indenture, providing among other things,
for the. issuance under the Indenture of the Fixed Rate Notes (as defined in
Supplemental Indenture No. 1):
6091.XXXXXXX.DEBT. 181B:1
WHEREAS, Section 10.2(ii) of the Indenture provides, among
other things, that, upon receipt of a written instruction from the Lessee and
the Owner Trustee, the Indenture Trustee shall consent to certain amendments to
the Facility Lease; and
WHEREAS, the Owner Trustee and the Lessee intend to execute
Amendment No. 1, dated as of November 18, 1986 (Lease Amendment No. 1), to the
Facility Lease, among other things, to amend section 3(a) thereof and the
schedules thereto;
NOW, THEREFORE, in consideration of the premises and of other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Definitions: Amendment.
(a) Definitions. Except as otherwise defined herein and in the
recitals, capitalized terms used herein shall have the respective meanings set
forth in Appendix A to the Participation Agreement.
(b) Amendments to Tax Indemnification Agreement. The fact that
amendments to the Tax Indemnification Agreement are contained in this Amendment
No. 1 to the Participation Agreement does not mean that the consent or agreement
of any party to this Amendment No. 1 to the Participation Agreement other than
the Lessee and the Owner Participant is required to amend the Tax
Indemnification Agreement at this time or at any time in the future. The Lessee
and the Owner Participant hereby amend:
(1) Section l(a)(13) of the Tax Indemnification Agreement to
read in its entirety as follows:
"(13) The Owner Participant's marginal federal rate of
income tax is 46% in 1986, 39.95068% in 1987 and 34% in 1988
and thereafter, without giving effect to any credits against
tax.";
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6091.XXXXXXX.DEBT.181B:1
(2) Section l(a)(5)(i) of the Tax Indemnification Agreement to
read in its entirety as follow:
"(i) in the case of the ITC Property, the portion of
the Purchase Price allocated to Unit 2 as set forth in the
Current Pricing Assumptions (as defined in Section 3(e) of the
Facility Lease), reduced by. the full amount of the Investment
Tax Credit taken by the Owner Participant with respect
thereto; and;
(3) Section 1(b) of the Tax Indemnification Agreement by
adding at the end thereof a new subsection (24) which reads as follows:
"(24) The ITC Property is transition property within
the meaning of Section 49(e) of the Internal Revenue Code of
1986, as amended.".
SECTION 2. Implementation.
(a) Forms. The forms of Supplemental Indenture No. 1 and Lease
Amendment No. 1 are attached hereto as Exhibits A and B, respectively. All
blanks in Supplemental Indenture No. 1 and Lease Amendment No. 1 shall be
appropriately filled in or completed, all in a manner consistent therewith and
with the Transaction Documents and the Financing Documents.
(b) Request by the Owner Participant. In accordance with
Section 2.01 of the Trust Agreement, the Owner Participant hereby requests that
the Owner Trustee (i) execute and deliver this Amendment Xx. 0, Xxxxxxxxxxxx
Xxxxxxxxx No. 1 and Lease Amendment No. 1 (collectively, the Refunding
Amendments); (ii) execute the Fixed Rate Notes and request the Indenture Trustee
to authenticate and deliver the Fixed Rate Notes pursuant to Section 3.5(2) of
the Indenture; and (iii) execute and deliver all other agreements, instruments
and certificates contemplated by the Transaction Documents, the Financing
Documents and the Refunding Amendments.
(c) Instruction and Consent. The Lessee and the Owner Trustee
hereby instruct the Indenture Trustee (i) to consent to Lease Amendment No. 1,
and the Indenture Trustee so consents, and (ii) to execute Supplemental
Indenture No. 1, all in accordance with Section 10.2 of the Indenture.
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6091.XXXXXXX.DEBT. 181B: 1
(d) Recordations and Filing. The Lessee agrees that it shall
cause to be made the recordations and filings set forth in Schedule 1 hereto and
represents that such filing. and recordations are all the recordations and
filings that are necessary in order to preserve, protect and perfect the Owner
Trustee's rights and interests under the Facility Lease, as amended by Lease
Amendment No. 1, and the first and prior security interest of the Indenture
Trustee in the Lease Indenture Estate under the Indenture, as amended by
Supplemental Indenture No. 1.
(e) Refunding of Bonds. The Loan Participant agrees that,
unless it obtains the written consent of the Owner Participant, (1) it will
refund its Lease Obligation Bonds, Series 1986B (the Bonds), issued pursuant to
the Series 1986B Bond Supplemental Indenture, dated as of November 18, 1986 (the
series 1986B Bond Supplemental Indenture), only in connection with the refunding
of an equal principal amount of the Pledged Lessor Notes identified in schedule
2 to the Series 1986B Bond Supplemental Indenture (the Pledged Lessor Notes),
or, to the extent that the Lessor Notes described in Schedule 3 to such Series
1986B Bond Supplemental Indenture (the Lessor Notes) are subjected to the lien
of the Collateral Trust Indenture, in connection with the refunding of an equal
principal amount of such Lessor Notes and (2) subsequent to any Lessor Notes
being subjected to the lien of the Collateral Trust Indenture, or, if the Lessor
Notes are not so subjected, a mandatory redemption of Bonds pursuant to Section
1.04(a) of the Series 19863 Bond Supplemental Indenture, the principal amount of
Pledged Lessor Notes bearing interest at the rates per annum of 8.05%, 8.95% and
10.15% respectively, and Lessor Notes, if any, bearing interest at the rates per
annum of 8.05%, 8.95% and 10.15%, respectively, shall not be less than the
principal amount of Bonds bearing interest at the rates per annum of 8.05%,
8.95% and 10.15% respectively.
(f) Investment. Contemporaneously with the execution of this
Amendment No. 1, the Owner Participant is delivering to the Owner Trustee a
check in immediately available funds in the amount of $1,123.15 (the Additional
Investment) to be used in connection with the redemption of the Initial series
Note. The Owner Trustee's Investment shall, for all purposes of the
Participation Agreement, be increased by an amount equal to the additional
Investment.
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6091.XXXXXXX.DEBT.l8lB:l
(g) Payment of Transaction Expenses. The Owner Participant
shall pay to the Owner Trustee on the Refunding Date the sum of $500,000 to be
disbursed by the Owner Trustee on account of Transaction Expenses as
contemplated by section 14 of the Participation Agreement.
SECTION 3. Miscellaneous.
(a) Execution. This Amendment No. 1 may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. Although this Amendment No. 1 is dated as of the date first
above written for convenience, the actual dates of execution hereof by the
parties hereto are respectively the dates set forth under the signatures hereto,
and this Amendment No. 1 shall be effective on the latest of such dates.
(b) Governing Law. This Amendment No. 1 has been negotiated
and delivered in the State of New York and shall be governed by, and be
construed in accordance with, the laws of the State of New York.
(c) Responsibility For Recitals. The recitals contained herein
shall be taken as the statements of the Lessee, and the other parties hereto
assume no responsibility for the correctness of the same.
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6091.XXXXXXX.DEBT.l81B:1
IN WITNESS WHEREOF, the parties hereto have each caused this
Amendment No. 1 to the Participation Agreement to be duly executed by their
respective officers thereunto duly authorized as of the dates set forth below.
XXXXXXX LEASING CORPORATION
By:
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Assistant Treasurer
Date: November 25, 1986
By:
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President
Date: November 25, 1986
PUBLIC SERVICE COMPANY
OF NEW MEXICO
By:
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Vice President and
Corporate Controller
Date: November 25, 1986
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6091.XXXXXXX.DEBT.l81B:1
THE FIRST NATIONAL BANK OF
BOSTON, in its individual
capacity and as Owner Trustee
By:
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Authorized Officer
Assistant Vice President
Date: November 25, 1986
CHEMICAL BANK, in its individual
capacity and as Indenture Trustee
By:
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Vice President
Date: November 25, 1986
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6091.XXXXXXX.DEBT. l81B:l
Schedule 1
to
Amendment No. 1
to
Participation Agreement
RECORDATIONS AND FILINGS
Part I. Recordations.
County Recorder, Maricopa County, Arizona:
(i) Amendment No. 1 to the Facility Lease; and
(ii) Supplemental Indenture No. 1 to the Indenture.
Part II. Filing:
(a) Separate financing statement amendments naming PNM as
"Lessee" and the Owner Participant's Owner Trustee as "Lessor", and the
Indenture Trustee, as Assignee of the Owner Trustee, with respect to the
Facility Lease, as amended by Lease Amendment No. 1, to be filed in the records
of:
(1) the Secretary of State of the State of Arizona
(regular and public utility filings);
(2) the Clerk of Maricopa County, Arizona;
(3) the Secretary of State of the State of New Mexico;
and
(4) the Clerk of Bernalillo County, New Mexico.
(b) Separate financing statement amendments naming the Owner
Trustee as "Debtor" and the Indenture Trustee as "Secured Party", with respect
to the Indenture, as amended by Supplemental Indenture No. 1, to be filed in the
records of:
(1) the Secretary of State of the State of Arizona;
6091.XXXXXXX.DEBT.l8lB:1
(2) the Clerk of Maricopa County, Arizona;
(3) the Secretary of State of the State of New Mexico;
and
(4) the Clerk of Bernalillo County, New Mexico.
(c) A financing statement amendment naming the Owner Trustee
as "Debtor" and the Indenture Trustee as "Secured Party", with respect to the
Indenture, as amended by Supplemental Indenture No. 1, to be filed with the
Secretary of State of the Commonwealth of Massachusetts.
(d) Separate financing statement amendments naming Funding
Corp as "Debtor" and the Collateral Trust Trustee as "Secured Party", and
listing, as collateral covered thereby, the "Pledged Property" under the
Collateral Trust Indenture, as amended and supplemented, to be filed with:
(1) the Secretary of State of the State of Arizona;
(2) the County Clerk of Maricopa County, Arizona;
(3) the Secretary of State of the State of New Mexico I
and
(4) the County Clerk of Bernalillo County, New Mexico.
(e) Supplemental Indenture No. 1 to the Indenture, to be filed
with the Secretary of State of the State of New Mexico, under the Public Utility
Act.
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6091.XXXXXXX. DEBT. l8lB: 1
PUBLIC SERVICE COMPANY OF NEW MEXICO
Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
November 25, 1986
Xxxxxxx Leasing Corporation
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Assistant Treasurer
Current Pricing Assumptions
Participation Agreement
dated as of August 12, 1986,
as amended
Dear Sirs:
Attached hereto as Schedule 1 is a list of the current Pricing
Assumptions used in connection with the adjustment to Basic Rent, Casualty
Values, Special Casualty Values and Termination Values agreed to in connection
with the transactions consummated on November 25, 1986, with respect to the
above-captioned Participation Agreement and the Facility Lease, as amended, and
the Indenture, as amended, referred to therein.
We understand that the Current Pricing Assumptions reflected
on Schedule 1 hereto may not be amended without your prior written consent.
Sincerely,
PUBLIC SERVICE COMPANY OF NEW Mexico
By:
--------------------------
Vice President and
Corporate Controller
6091. XXXXXXX DEBT. l8lH: 1
SCHEDULE 1
CURRENT PRICING ASSUMPTIONS
Basic Rent, Casualty Values, Special Casualty Values and
Termination Values, as set forth in the Facility Lease, as amended by Amendment
No. 1 thereto, have been computed on the basis of the following pricing
assumptions:
1. Investment Percentage: 26.041%
2. Loan Percentage: 73.959%
3. Interest Rate on:
(a) Fixed Rate Note due January 15, 1992 8.05%
(b) Fixed Rate Note due January 15, 1997 8.95%
(a) Fixed Rate Note due July 15, 2012 10.15%
(d) Assumed Interest Rate for interim period 8.3493068%
4. Federal ACRS Deductions: 10-year public
utility property
deductions on the
basis of 90% of
Purchase Price
allocated to Xxxx 0
and 100% of Purchase
Price allocated to
Common Facilities
5. Investment Tax Credit Retained by the Lessor: 10% of Purchase Price
allocated to Unit 2
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6091.XXXXXXX.DEBT.181H:l
6. Owner Participant's Tax
Year-End: December 31
7. Purchase Price: $l00,000,00O
(a) Purchase Price
Allocated to Unit 2: $87,935,000
(b) Purchase Price
Allocated to Common
Facilities: $12,065,000
8. Closing Date: August 18, 1986
9. Transaction Expenses: .8% of Purchase
Price paid by the
Owner Participant on
the closing Date and
.5% of the Purchase
Price paid on
November 25, 1986 in
addition to its
Investment (amortized
on a straight-line
basis from the date
paid through the end
of the basic lease
term)
10. Real Estate Investment: $32,836
11. Basic rent payment dates: January 15 and
July 15 of each year
(rent payable in
arrears)
12. First basic rent payment
date: July 15, 1987
13. Last basic rent payment
date: January 15, 2016
14. Interim rent payment date: January 15, 1987
15. Marginal Federal Tax Rate: 46% for 1986,
39.95068% for 1987
and 34% thereafter
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6091.XXXXXXX.DEBT.181H:1
16. First Estimated Tax Payment
Date: September 15,1986
17. Tax Accounting Method: Accrual
18. Amortization of Fixed Rate
Notes: As set forth in the
schedule attached
thereto
19. Tax Estimation Method: 90% current estimate;
10% make-up payment
in March of the
following year
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6091.XXXXXXX.DEBT. 181H:1
Accepted and Agreed:
XXXXXXX LEASING CORPORATION
By:
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Title:
